Despite pledging to provide stability, Mr Turnbull, a former Rhodes Scholar and investment banker, opted two months ago to hold on an early election – a political gamble which appears to have spectacularly backfired.

With about 70 per cent of votes counted, Mr Turnbull’s Liberal-National coalition suffered a three per cent swing and appeared on track to win about 75 seats in the 150-member lower house, down from 90. The opposition Labor party was tipped to win about 68 seats, up from 55.

Australia will now wait until at least Tuesday – when counting resumes - to find out the final outcome.

In an unusual and slightly shrill post-election speech in Sydney last night, Mr Turnbull was forced to admit the result was in the balance but insisted he may yet win a majority.

“I’m sure that as the results are refined and come in over the next few days with all of the counting, we will be able to form that majority government,” he said.

In contrast, Bill Shorten, the Labor party leader, made something of a victory speech following an election performance that exceeded expectations but is likely to leave him in opposition.

“The Labor party is back,” he said.

“Three years after the Liberals came to power in a landslide, they have lost their mandate. [Mr Turnbull] will never be able to promise the stability, which he has completely failed to deliver.”

Ignoring calls to hold an election late last year when his approval ratings were soaring, he opted for a rare winter election and an unusually long eight-week campaign.

His dismal result yesterday could lead to questions about his long-term leadership, particularly among the Liberal party’s conservative wing which mistrusts his progressive positions on climate change and same sex marriage.

The knife-edge outcome follows years of political turmoil in Canberra, including four changes of leader in the past six years.

As the results emerged, a prominent right-wing commentator, Andrew Bolt, wrote a blog post urging Mr Turnbull to resign.

“You have been a disaster,” he wrote in an open letter to Mr Turnbull. “You betrayed Tony Abbott and then led the party to humiliation, stripped of both values and honour. Resign.”

Voters line up outside polling station in Sydney, Australia, on Saturday, July 2, 2016Credit:
BLOOMBERG

Australian elections, like those in Britain, typically produce a majority government – and recent experiments with hung parliaments have not fared well.

At the 2010 election, Labor’s Julia Gillard lost her majority and was forced to rule over a hung parliament – a result that destabilised her leadership and caused continuous political instability.

Mr Turnbull based his campaign on a pledge to ensure political and economic stability and pursue growth in the technology sector. He promised large-scale cuts to business taxes over the coming four years.

Mr Shorten, a former union leader, promised to boost health and education spending and to curb tax concessions for property investors.

Adding to his woes, Mr Turnbull’s decision to hold a rare double-dissolution election – at which all upper house MPs are up for re-election, rather than half – also appeared to have backfired.

Early counting for the upper house indicated that the coalition will not gain a majority and that a broad range of somewhat unpredictable minor parties and independents will be elected, including Pauline Hanson, the notorious right-wing firebrand who was an MP in the late 1990s.